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**coolboyx12****Member**- Registered: 2023-03-10
- Posts: 24

A person insured his vehicle worth Rs. 450,000 at a rate of 2.5% for 4 years. After 3 years he got a claim of damages worth Rs. 750,000. How much loss had he recovered through insurance.

How do you solve this question?

It pays to keep an open mind, but not so open your brains fall out. - Carl Sagan.

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**ganesh****Administrator**- Registered: 2005-06-28
- Posts: 41,290

It appears to me that if one wants to make progress in mathematics, one should study the masters and not the pupils. - Niels Henrik Abel.

Nothing is better than reading and gaining more and more knowledge - Stephen William Hawking.

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**coolboyx12****Member**- Registered: 2023-03-10
- Posts: 24

Thanks, a lot.

It pays to keep an open mind, but not so open your brains fall out. - Carl Sagan.

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**phrontister****Real Member**- From: The Land of Tomorrow
- Registered: 2009-07-12
- Posts: 4,748

Hi coolboyx12;

Edit: On re-reading the question, I've come to the conclusion that I don't understand the question at all! So maybe you should ignore what I wrote in the hide bar.

I'll think about it some more, but there seems to be some critical info missing...

*Last edited by phrontister (2023-03-19 12:38:44)*

"The good news about computers is that they do what you tell them to do. The bad news is that they do what you tell them to do." - Ted Nelson

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**phrontister****Real Member**- From: The Land of Tomorrow
- Registered: 2009-07-12
- Posts: 4,748

Back again...

What exactly does the phrase 'he got a claim of damages' mean?

My first understanding was that he'd received a bill from a repairer to fix Rs. 750,000 worth of damages, but I see now that it could mean that he'd lodged an insurance claim and been paid that amount by the insurer.

I have other Qs about the wording rattling around in my head, but they may change depending on the answer I get to the above.

"The good news about computers is that they do what you tell them to do. The bad news is that they do what you tell them to do." - Ted Nelson

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**coolboyx12****Member**- Registered: 2023-03-10
- Posts: 24

Hi phrontister;

the answer is 719,512.5, look at Ganesh's post.

*Last edited by coolboyx12 (2023-03-17 04:27:56)*

It pays to keep an open mind, but not so open your brains fall out. - Carl Sagan.

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**phrontister****Real Member**- From: The Land of Tomorrow
- Registered: 2009-07-12
- Posts: 4,748

Thanks, coolboyx12.

So I've looked at ganesh's method, and have some comments about it:

A. Depreciation:

The problem doesn't mention depreciation, nor its percentage, but ganesh's method includes a yearly fixed depreciation rate of 10%, applied to 3 years.

1. There seems to be no generally-used standard regarding the amount of vehicle depreciation: instead, the depreciation percentage depends on many factors, such as the make and model of the vehicle, its age and its use (eg, private or business).

2. Vehicle depreciation rates are not necessarily fixed (eg, diminishing rates).

3. If we assume that depreciation applies, it's important to know when it takes effect: eg, whether it's at the beginning, or at the end, of each year (often a vehicle's value depreciates immediately a person takes possession of it). If applied at the start of each year, it should be applied in each of the 4 years, not just the first 3 (the damages claim was in year 4).

B. Insurance premiums:

There are 4 insurance terms ('After 3 years he got a claim of damages'), but ganesh's method only charges for 3.

Another thing unclear to me is the huge discrepancy between the initial worth of the vehicle (Rs. 450,000) and the subsequent 'claim of damages' (Rs. 750,000).

To me, it implies that the initial worth (unadjusted over time) was simply used as a basis for premium calculation, and that the insurance policy actually covered a higher amount.

*Last edited by phrontister (2023-03-17 15:28:27)*

"The good news about computers is that they do what you tell them to do. The bad news is that they do what you tell them to do." - Ted Nelson

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**ganesh****Administrator**- Registered: 2005-06-28
- Posts: 41,290

coolboyx12 wrote:

A person insured his vehicle worth Rs. 450,000 at a rate of 2.5% for 4 years. After 3 years he got a claim of damages worth Rs. 750,000. How much loss had he recovered through insurance.

It appears to me that if one wants to make progress in mathematics, one should study the masters and not the pupils. - Niels Henrik Abel.

Nothing is better than reading and gaining more and more knowledge - Stephen William Hawking.

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**phrontister****Real Member**- From: The Land of Tomorrow
- Registered: 2009-07-12
- Posts: 4,748

Hi ganesh & coolboyx12;

I've redone my work (using Excel tables this time), with calculations as per the options named in the hide buttons below:

Both options include scenarios for insurance premiums charged for 3 days and for 4 days.

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**coolboyx12****Member**- Registered: 2023-03-10
- Posts: 24

Hi phrontister,

the answer is scenario 1 with depreciation.

It pays to keep an open mind, but not so open your brains fall out. - Carl Sagan.

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**phrontister****Real Member**- From: The Land of Tomorrow
- Registered: 2009-07-12
- Posts: 4,748

Thanks, coolboyx12.

I resign!

...not that I think there's anything wrong with the thoughts I've presented!

*Last edited by phrontister (2023-03-19 12:40:12)*

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